Firms are unclear on FPC’s role
TOO LITTLE is known about the new Financial Policy Committee’s (FPC) role and instruments and how it will impact on lenders, Paul Smee, director-general of the Council of Mortgage Lenders (CML) said yesterday.
Smee warned the post-Financial Services Authority (FSA) landscape for mortgages is going to become more complex under the Prudential Regulation Authority and the Financial Conduct Authority.
The FPC’s remit, which aims to reduce the risk of asset bubbles arising, “is still opaque”, he told the CML’s mortgage industry conference.
“How far will its direct powers stretch? Will it spot bubbles and identify how they may be deflated? Will it actually wield the instruments of deflation?” he asked. “The FPC uses mortgages as an example of a market where it could see itself making an impact. So we need to know the terms of engagement.”
The Bank of England’s Charlie Bean also addressed the conference, repeating the Bank’s view that quantitative easing is necessary because of low demand and because high inflation is only a temporary problem.
He rejected other demand-boosting measures, such as giving households vouchers to spend.
“Such a temporary increase in disposable income would be likely to be very largely saved,” he said.